1. Which statement is true of an opportunity cost?

A. It is the cost of a special order option

B. It is always variable

C. It is the potential benefit as a result of following an alternative course of action

D. It is a sunk cost

2. The Wood Division of Fir Products, Inc. manufactures wood moldings and sells them externally for $100. Its variable costs are $40 per unit, and its fixed cost per unit is $14. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $54. Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is

A. $14

B. $40

C. $54

D. $100

Answer rating: 100% (QA)

1 C It is the potential benefit as a r... View the full answer